Manufacturing and export activity in Southeast Asia is continuing to grow, but ongoing trade prosperity, and in turn air cargo demand, is far from certain.

 A change in the White House sent ripples across global supply chains, but for Southeast Asia, the return of Donald Trump as US president only exacerbated an already existent situation.

Over the closing months of 2024, rates on airfreight exports out of the region – particularly from places like Vietnam – saw a marked increase against the same period of 2023.

Asked how they thought things would pan out over the coming months, one source told Air Cargo News (ACN) that they expected the upward trend in rates to be “sustained” amidst all the talk coming out of the Oval Office of tariffs.

For shippers, there was a feeling of frustration, of something of a hand grenade having been hurled into an already precarious situation as part of the western desire to wean itself from a dependency on cheap, Chinese products.

Trump’s threat to impose tariffs on China has led to further talking up and expectations that this year will be one of ramped up trade diversification towards Southeast Asia, with the likes of Thailand and, in particular, Vietnam seemingly in line for some big wins – not to mention India.

Movement in this direction follows the better part of two decades’ worth of hype that these countries would become the “new China”. Such talk misses the abundance of domestic, as well as access to, vital raw materials that has powered China’s growth but, it nonetheless has some footing in reality, with more and more manufacturing and export activity occurring in Southeast Asia.

Success breeds trouble

Numbers for Vietnam’s 2024 certainly make for positive reading. Exports over the 12-month period jumped up 14.3% against the preceding year, driven by massive demand for electronics, garments, and smartphones – “a lot of which flying express out to customers in Europe and North America” – generating $405.5bn in revenues for the country.

There are those, however, who worry Vietnam’s recent bonanza may leave it on the hook with the incoming US administration. As far as trade deficits with the US go, Vietnam’s trade surplus with the US is beaten only by China and Mexico.

Economists, including those at Goldman Sachs, have suggested this places the country at far greater risk of being hit by US tariffs.

Such concern may explain the less optimistic response on how 2025 could play out from one of the region’s key airfreight carriers.

Speaking to ACN, a spokesperson for Singapore Airlines (SIA) says that the carrier would “maintain a cautious outlook for our cargo business as the demand for airfreight begins to plateau going into 2025 against a backdrop of macroeconomic uncertainty and geopolitical tensions”.

Echoing words tossed around by others, there was a sense that the situation was far more “fluid” than perhaps the rhetoric surrounding the forecasts for the region’s next 12 months made apparent. The spokesperson adds, “export conditions in Southeast Asian countries, particularly Indonesia and Vietnam, remain fluid”.

And, of course, some of the bump the region’s airlines experienced in their cargo holds came on the back of the chaos in the Red Sea, with security concerns generated by the attacks on commercial shipping, pushing many to air as they sought to avoid the lengthy transit times of containerised goods going around the Cape of Good Hope.

There are questions marks how much longer the boost will last, with the Houthi militia responsible for the attacks having said that they intend to deescalate the situation. Even so, the SIA spokesperson said that there were areas where they retained confidence.

They add that ”we will focus on our key verticals and e-commerce to drive cargo performance, while continuing to monitor key trade lanes and adjust capacity to meet demand”, having last year recorded a near double-digit percentage increase in e-commerce volumes on the year prior.

Great growth ahead

While Indonesia looks set to be the big winner from upward trends in e-commerce demand, the whole region is forecast to experience year-on-year growth right through to the end of the decade.

This, of course, will necessitate demand for capacity, with carriers like SIA and Vietnam’s own Vietnam Airlines lining themselves up to cater to such demand.

And in August last year, SIA announced substantial adjustments for its 2025 network, with new flights across Europe, including more into London Gatwick, coinciding with news that it had lined up WFS to handle additional cargo volumes coming in the bellyhold of these services.

The carrier’s homebase, Singapore Changi Airport, also starts the year on the back of a strong 2024. Freight movements at the gateway leapt 14.6% up on 2023, falling just shy of hitting the 2m tonnes mark, with the final quarter providing a little over 25% of this.

The gateway said that contributing to this growth had been “major improvements” in the flows between not only Singapore and China but Singapore and the US, while together with the ever-present e-commerce, the recovery of the country’s electronics sector also played its part.

The SIA spokesperson tells ACN that the carrier would be working closely with its “aviation ecosystem partners to optimise operational efficiencies within Singapore’s air cargo hub”.

Alongside its flag carrier, Changi also looks set for increased volumes with full-freighter flights having been launched into the Singaporean gateway by both Shandong Airlines and Air Incheon.

And, while stopping short of the optimism and “year of growth” expected on the passenger side, the gateway’s chief executive officer Yam Kum Weng says that on the back of 2024’s “strong growth” in cargo, the addition of “a bumper crop of 11 new city links, strengthening the air hub’s network and opening up a world of new destinations” looked set to “support business ties”.

Elsewhere, Malaysia’s MASkargo enters the new year on the back of a big win, having struck up an MoU with Qatar Airways Cargo, through which it hopes will broaden its access – via Qatar’s network – to European markets, enabling further exports of Malaysian products.

And there have already been some benefits from the MoU, with some 2,400 tonnes of freight having been flown in the first few weeks of the agreement having been struck.

Plus, it seems that partnerships form the bedrock of an effort by the cargo division of Malaysia Airlines to tap into the growing potential for airfreight capacity in the region.

Towards the end of last summer, a tender notice issued by Malaysia Aviation Group (MAG) indicated that the carrier was on the hunt for a Boeing 737-800 freighter operator that MASkargo could partner with to expand its regional Asia operations.

The carrier’s chief executive, Mark Jason Thomas, confirms to ACN before this document was discovered that, while long term it may look to acquire new freighters, the short-term goal was the pursuit of short- and medium-term partnerships, particularly to operate narrowbody services to regional destinations as it utilised its own freighter fleet for long-haul services.

Internationals wade in

Seeking to tap into Southeast Asia’s potential airfreight growth opportunities, the regional carriers are not alone. Both China Cargo Airlines and Emirates SkyCargo have recognised the gains that could be made.

Tapping into that, China Cargo Airlines has tapped up Tam Group to act as its general sales and service agent for the Philippines. Making use of its Airbus A320s, the Chinese carrier flies thrice weekly from Cebu to Shanghai, while also flying five times a week from Manila into Shanghai.

Responding to the news, Tam Group’s senior vice president Alvin Tam says: ”We are excited to deepen our partnership with China Cargo Airlines in the Philippines”.

He adds: “This appointment not only enhances our regional footprint but also enables us to deliver improved services and support for their operations. At Tam Group, we have implemented various solutions, including a robust CRM system and 24/7 customer service, to ensure a seamless experience for our clients.

"We are continuously seeking enhancements to our offerings and look forward to collaborating closely with China Cargo Airlines to unlock their full potential in the Philippine market.”

Questioned on the state of the Dubai-based carrier’s freight operations in Southeast Asia, Emirates SkyCargo’s vice president of cargo commercial for the Far East and Australasia Abdulla Alkhallafi says that it is a region that “continues to perform positively for us”.

As to be expected, Alkhallafi tells ACN that the carrier was witnessing demand spikes being driven by increased manufacturing in the region, together with the “notable growth in e-commerce volumes” before adding that he and the team would be continuing to “explore opportunities to enhance our freighter capacity in these markets to cater to market demand in addition to existing belly capacity”.

However, much like SIA, it seems that Emirates is aware of the broader geopolitical context in which the growth in airfreight opportunities are arising. Like SIA’s spokesperson, Alkhallafi cautions the need for vigilance.

He tells ACN: “Logistics does not exist in isolation, of course, and so there is some expected uncertainty around future demand, due to geopolitical and economic reasons. However, we remain confident in Emirates SkyCargo’s role in supporting businesses across Southeast Asia to connect with their customers and suppliers worldwide.”